Discovering how nonprofits can work together to move the needle on social issues

Does cross-sector collaboration lead to higher nonprofit capacity?

By: Michelle Shumate, J. Sophia Fu, Katherine R. Cooper

Over the past several decades, nonprofits have been encouraged to partner with other organizations to increase their capacity and effectiveness. Funders and nonprofit consultants alike take for granted that partnering with nonprofits, businesses, and governments breeds nonprofit capacity, defined as the “processes, practices, and people that the organization has at its disposal that enable it to produce, perform, or deploy resources to achieve its mission” (Shumate et al. 2017, p. 156). For example, both the guidance for partnering with USAID and the common grant application used by many states (see https://www.unitedphilforum.org/common-grant-applications) ask nonprofits to describe their partnerships with other organizations in the nonprofit, private, and public sectors as evidence of their suitability for receiving funding.

However, to date, there has not been a large empirical study that examined the relationship between nonprofit capacity and nonprofit collaboration. In the forthcoming Journal of Business Ethics paper, we examine the question (which we also made the title): Does cross-sector collaboration lead to higher nonprofit capacity? Based on a survey of 452 nonprofit organizations in the United States, we conclude that collaboration, including cross-sector collaboration with government agencies and businesses, does not result in higher nonprofit capacity.

In this study, we examined nonprofits with three types of interorganizational network portfolios, or what might be considered collaboration personalities. Nonprofits with a restricted within-sector portfolio have, on average, four collaboration partners that are within the nonprofit sector. In essence, this is the “introvert” personality, with a few close nonprofit collaborators. Nonprofits with robust within-sector portfolios have the most within-sector relationships, about 16 nonprofit partners on average. In addition, they have 2 partnerships with either businesses or government agencies that extend beyond funder-recipient. In other words, this is an extrovert personality, with many connections. The last portfolio, the cross-sector partnership portfolio, have relationships with both nonprofits (11 on average) and businesses or government agencies (15 on average). Fifty-three percent of cross-sector partnerships (those with businesses or government agencies) were more involved than funder-recipient. To continue the metaphor, this is also an extrovert personality, but who is confident enough to cross-borders, cultures, and boundaries. The restricted within-sector portfolio was the most common among nonprofit organizations in our sample and the cross-sector partnership portfolio was the least common. In this research, we compared nonprofits with either robust-within sector portfolios or cross-sector portfolios to those with restricted within-sector portfolios.

We examined nonprofit capacity using an instrument we developed (see Shumate et al. 2017 or contact us for a copy of the instrument for details). The nonprofit capacity instrument measures 8 dimensions of nonprofit capacity: board development, mission-orientation, external communication, staff development, financial capacity, strategic planning, operational capacity, and adaptive capacity. We chose this instrument because we demonstrated that it was both reliable and valid (researcher speak meaning that it measures what it says it does and it does so in a consistent way across organizational types). In this study, we examined the first 6 dimensions of nonprofit capacity, and examined how operational capacity and adaptive capacity might enhance the influence of networking on the other capacity dimensions.

Back to the question — does cross-sector (and actually robust within-sector) collaboration result in higher levels of capacity? The answer, surprisingly, is no. Since these results run against the prevailing wisdom of funders and consultants, you might wonder, how should I interpret this? What are the implications for my organization? We suggest a few possibilities. First, it might be that although individual nonprofits organizations don’t grow in their capacity, nonprofit collaborations still produce good outputs (i.e., kids educated, people fed, environment restored). In other words, the collaborations might not lead to better organizational capacity, but they still might be a good thing for other reasons. Second, we take a large-scale approach, which may not capture the nuances of individual nonprofit activities within their collaboration. In other words, some nonprofits may undertake specific activities that lead them to build capacity, but collaboration in and of itself doesn’t lead to improved capacity. Third, collaboration typically requires financial and human resources, and many of the nonprofits in our study are maintaining relationships with 20 or 30 partners. Some of the energy spent cultivating and maintaining partnerships might be better spent improving other capacities. For example, nonprofits in our research tend to have lower operational capacity than the other dimensions – that means that they don’t have the ability to set goals, accurately measure performance, and then improve based on those results. It might be that organizations that focus on improving their operational capacity do better than those who pursue a lot of partnerships. In fact, we find that increasing adaptive and operational capacity is related to increases in other types of capacity. If we are right, then scholars, funders, and consultants should be careful about prescribing partnerships as the solution to capacity ills – the prescription doesn’t seem as effective as once thought.